The General Mining Act of 1872 has left a legacy of riches and ruin

By ROBERT MCCLURE AND ANDREW SCHNEIDER, SEATTLE POST-INTELLIGENCER REPORTERS

Updated 10:00 pm, Sunday, June 10, 2001

Photo: Gilbert W. Arias/Seattle Post-Intelligencer

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Heap-leach mining of gold on land that was once part of the Fort Belknap Indian Reservation in northern Montana has left the Little Rockies scarred and the reservation's water fouled. Tens of thousands of abandoned mines taint the landscape across the West. less

Heap-leach mining of gold on land that was once part of the Fort Belknap Indian Reservation in northern Montana has left the Little Rockies scarred and the reservation's water fouled. Tens of thousands of ... more

Photo: Gilbert W. Arias/Seattle Post-Intelligencer

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A notice warns of a waste pile from an old mine in Washington near the Canadian border. Hundreds of thousands of such abandoned mines -- no one knows how many -- lace federal lands in the West. One watchdog group puts the cleanup costs at $32 billion to $72 billion less

A notice warns of a waste pile from an old mine in Washington near the Canadian border. Hundreds of thousands of such abandoned mines -- no one knows how many -- lace federal lands in the West. One watchdog ... more

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A frog pond's future is in doubt if the proposed Crown Jewel gold mine east of Oroville goes forward. Supporters say the mine would bring badly needed jobs to Okanogan County, but others say ruining the land isn't worth it. less

A frog pond's future is in doubt if the proposed Crown Jewel gold mine east of Oroville goes forward. Supporters say the mine would bring badly needed jobs to Okanogan County, but others say ruining the land ... more

Photo: Gilbert W. Arias/Seattle Post-Intelligencer

The General Mining Act of 1872 has left a legacy of riches and ruin

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Gold, silver, platinum and other precious metals for free. Land for $5 an acre or less.

That's the deal mining companies get from the U.S. government when miners turn their explosives and earthmovers toward public land in the West.

It's pretty much the same deal miners have had for 129 years, ever since Congress approved the General Mining Law in 1872.

Modern mining methods have left the West pockmarked by huge craters, some so large that they are visible from space. Whole mountainsides are ground to dust and doused with cyanide, teasing out enough gold for a single wedding ring from several tons of rock and soil.

And tens of thousands of abandoned mines scar the landscape, many emitting an orange-red, acid-laced runoff called "yellow boy." These mines have poisoned more than 16,000 miles of Western streams.

When a mine goes bankrupt, taxpayers sometimes get stuck with the costs of cleaning up the mess -- more than $275 million for three mines alone in Colorado, South Dakota and Montana that closed in the 1990s.

Under terms of the antiquated law, miners cart away everything from gold to kitty litter from public lands -- minerals worth about $11 billion in the last eight years alone. Not only does the U.S. Treasury get nothing, Congress has granted miners a tax break worth an estimated $823 million in the coming decade.

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Over the years, public lands the size of Connecticut have been made private under terms of the 1872 law, all for $2.50 to $5 an acre, though not all of it has been used for mining. Some claims became ski resorts, housing subdivisions, hotels and even a brothel, in Nye County, Nev.

Congress has acted over the years to rein in some abuses allowed under the act, but problems persist, and the debate over the future of Western lands continues. New mining regulations designed to protect taxpayers and the environment went into effect just hours before George W. Bush became president -- and he soon moved to get rid of them.

A watered-down version of the rules or a full suspension is expected next month.

The controversy over the new regulations for administering the old law is just one more battle in a land-use war that has raged for generations. It's a complex subject, rich in history. But the issues boil down to three broad areas of disagreement: To what degree mining harms the environment, whether the jobs it produces are worth the damage, and whether the public interest is being subverted by the miners and their friends in Washington, D.C.

Opening the West

Complaints about a taxpayer rip-off started just about as soon as miners arrived in the vast American West.

Trying to establish order amid the chaos of the California gold rush in 1848, an Army colonel named Mason sent a dispatch to headquarters warning: "(T)he government is entitled to rents for this land, and immediate steps should be devised to collect them, for the longer it is delayed the more difficult it will become."

Nearly two decades later, Congress adopted the Lode Law of 1866 -- a troubled bill that won passage because it was attached to unrelated legislation.

The 1866 law, updated in 1870 and in 1872, probably wasn't what Colonel Mason had in mind. It simply legitimized what miners were already doing: Find a bit of federal land that appears to contain gold, silver or other "hard-rock" minerals, pound stakes at its corners to warn off others, dig, and -- if you guessed right -- cash in.

Like the better-known Homestead Act, which offered free land to anyone willing to farm it, the mining law was intended as an incentive to those willing to push West and settle the frontier.

That frontier was closed long ago, but the mining law remains on the books and very much in use -- even where mining would harm an increasingly settled region.

The new mining regulations targeted for repeal by the Bush administration give the government the right to reject a proposed mine if it would cause "substantial irreparable harm." Currently, federal officials must administer a law they say promotes mining as the best use of millions of acres of federal land, even in sensitive places such as Top Of The World, Ariz., a wide spot in the road 70 miles from Phoenix.

There, a Canadian company called Cambior wants to dig copper where wild boars roam and the hedgehog cactus blooms brilliant red in the spring. The sulfuric acid, trucks, noise and dust from a 24-hour-a-day mine would be plopped down just upstream from a lush, tree-shaded canyon -- a rarity there.

Cambior, which also ran a mine in Guyana where 300 million gallons of a cyanide-bearing solution spilled, wants to dig three pits covering nearly a square mile, reaching a depth of 600 feet. The hundreds of millions of tons of earth removed would be piled into heaps covering an additional square mile-plus.

The ore, the material that bears copper, would be doused with 400 tons of sulfuric acid per day. To do this, the company would reroute more than two miles of streams, some through channels constructed of a concretelike material.

The Canadian firm and its subsidiary, Carlota Copper Co., will pay no more than $1,700 for the public portion of the land it would mine. The company expects to mine some 478,000 tons of copper worth about $728 million at current prices.

Even a federal lawyer trying to defend the government's approval of the mine had to admit, "The circumstances here include a proposed project that is so invasive to the forest that it would never be considered, much less approved, were it not for the mining law of 1872."

And a federal judge handling a suit by environmentalists who tried to stop the project ruled that the mining law trumps their concerns.

"Because mining has been accorded a special place in the national laws related to public land, the development of mineral resources in the national forests may not be prohibited or unreasonably circumscribed," U.S. District Judge Paul Rosenblatt wrote. "The Forest Service consequently has no authority to categorically reject an otherwise reasonable mining plan of operations."

Bob Walish, manager of the Cambior project, said it is misleading to consider only the $5 per acre the company will pay the government. He said the company spent about $61 million prospecting, obtaining permits and fighting lawsuits.

Echoing the industry's supporters in Congress, Walish said the government should follow through with the intent of the mining law -- to privatize land in the West.

More than half of some states are still owned by the government, he noted.

"The debate in our mind isn't that we're stealing this from the public," he said. "It's 'Why is there (still) all this public land?'"

Stephen D'Esposito, president of the Mineral Policy Center, an environmental group dedicated to mine-law reform, points to Top Of The World and places like it when asked what's wrong with the 1872 law.

"It's time for a new deal that keeps our water clean, protects our public lands from destructive mineral development, eliminates corporate subsidies and gives the taxpayer a fair return," D'Esposito said.

"What's needed are three common-sense reforms: the right of the public to say 'no' when mining isn't the best use of our public lands; a requirement that mining companies pay to clean up their messes as a cost of doing business; and a provision that mining companies pay taxpayers a fair price for mining on public lands."

An economic savior

Though less of an economic force than in the past, mining remains an economic savior of some rural areas in the West, where more than 100 hard-rock mines are operating. And those who run the international corporations that have replaced the pick-and-shovel prospectors of the 1800s say the public still benefits from their hard work and willingness to risk a fortune to develop mines that might not return one.

They point out that mining still pays better than most jobs in the rural West, and they note that mining firms and their employees pay taxes, too.

And society gets something it can't live without, they argue: metals. U.S. manufacturers get about half their metals from right here at home.

"Mining makes our civilization.... Everything you do today depends on mining," Rep. Jim Gibbons, R-Nev., a former mining geologist, said at a recent congressional hearing. Before another hearing, Gibbons said that efforts to crack down on mining companies "may relegate us to a Third World status."

The miners say they are regulated enough. The government already has put about 165 million acres off-limits, and on an additional 182 million acres, the U.S. Forest Service or the Bureau of Land Management can reject mining permits. That leaves about 350 million acres of the West open to mining.

And miners note that the law doesn't excuse companies from having to abide by more-recent federal laws such as the Clean Water Act and the National Environmental Policy Act.

"We can't mine in parks. We can't mine in sensitive areas," said Jack Gerard, president of the National Mining Association. "The government every day makes public lands/public policy decisions."

Yet exercising this power can be expensive.

In 1995, President Clinton proposed a ban on mining in an area near Yellowstone National Park. A Canadian firm, Crown Butte Mines Inc., already had applied to privatize some land in the area and planned to use land already patented -- that is, converted to private property by others who paid a small fee.

The government had to pay $65 million to stop the mine. The money went to Battle Mountain Gold, which had bought Crown Butte. Battle Mountain Gold wants to open Washington state's first major open-pit gold mine, the Crown Jewel project in Okanogan County.

The 1872 Mining Law has been under fire for decades, but the industry has been able to head off countless attempts at reform. One of its bedrock arguments is that overhauling the law would risk national security.

"Destroying the mining law will risk the lives of our sons and daughters, for many will surely die in battle on some foreign shore because of it," said Richard Lawson, a retired four-star Air Force general who until recently headed the National Mining Association.

"Without the protection of the mining law, America cannot get the minerals it must have to remain free and secure, and we will go to war to get those precious metals."

But some Western communities pay a high price for this freedom.

Superfund sites abound

Signs near Spokane carry an ominous warning:

"This health advisory is posted to alert you to the presence of elevated levels of lead and arsenic in soils along the shorelines and beaches of the upper Spokane River.... Swallowing or breathing loose shoreline soils may be an increased health risk to people, especially infants, small children and pregnant women."

The signs, posted by the Spokane Regional Health District, warn that children shouldn't play in muddy soils along the river and should be closely supervised to ensure that they don't put dirt in their mouths.

Toxic goop is spilling into Washington fully 50 miles downstream from the Silver Valley, where North Idaho miners dug silver, lead and other metals from the earth for more than a century. The Spokane flows from Coeur d'Alene Lake, which the Environmental Protection Agency says holds some 70 million tons of mining waste -- enough to cover a football field 4.7 miles high.

And rivers all across the West are tainted by old mines, including the Columbia and the Okanogan in Washington.

The U.S. Environmental Protection Agency's roster of the nation's worst industrial contamination hot spots, the so-called Superfund list, includes more than 25 mines, a handful still active. Cleaning them up will cost billions of dollars.

Whole towns in Montana and Idaho have been swallowed by Superfund sites, their stream banks and hillsides denuded of plants.

In Idaho's Silver Valley, the source of the mine waste in the Spokane River, tests show that one in six children under age 6 have enough lead in their bodies to affect learning and other functions.

While much of the damage done by mining in the West happened decades ago, environmental problems continue:

Near Deadwood, S.D., a small Canadian firm went bankrupt and left taxpayers a $40 million cleanup bill.

At Montana's Fort Belknap Indian Reservation, another bankrupt Canadian company stuck taxpayers with an estimated $33 million in cleanup costs.

In southern Colorado, yet another bankrupt Canadian concern created a mess that will cost more than $200 million to clean up, while 17 miles of the Alamosa River were left devoid of fish and most other creatures for about eight years.

In central Idaho, Hecla Mining Co.'s Grouse Creek mine, hailed as a marvel of modern mining when it opened in 1994, has slowly leaked cyanide into the ground and into a nearby creek.

Near San Luis, Colo., Battle Mountain Gold's self-proclaimed "environmentally friendly" mine experienced a large and unexpected buildup of cyanide within a year of opening.

Near Whitehall, Mont., the Golden Sunlight mine, run by Placer Dome, a Canadian company, contaminated wells of two nearby ranchers.

There's a big difference between mines envisioned by Congress in 1872 and those operating today. Modern mines are far bigger, and many employ deadly cyanide to leach precious metals from rock. The leaching technique was used in small measure by miners in the early 1900s to draw gold and copper out of ore so low in mineral content that large-scale operators would have tossed it out as waste.

In the old days, leaching was done by misting cyanide over a barrel or large vat filled with crushed ore. The cyanide dissolved microscopic specks of gold from the rock, much as water dissolves sugar. As gold soared to $850 an ounce in the early 1980s, mining companies brought back the leaching technique in a big way, wringing more gold from long-closed mines and developing new ones where the ore had been considered too poor to bother.

Miners still mix cyanide and water and slowly trickle it over piles of ore, but the piles are much bigger. Now they blast away entire mountains of rock, pile the ore in heaps the size of a football field and apply a river of cyanide, leaving behind hills of tailings and waste rock.

Environmentalists cringe at the technique, not just because of the hazard of an accidental cyanide release, but also because of a long-term risk related to exposure of rock to the weather. The ore is often high in sulfides, and water passing through the rock and soil creates sulfuric acid, which in turn leaches poisonous heavy metals into runoff water, with iron in the rock turning streams an orange-red.

Forest Service, BLM decide

Environmental Protection Agency officials estimate that 40 percent of Western watersheds are affected by mining pollution. And sometimes EPA officials have advised against allowing a mine to open. But the EPA's concerns are sometimes ignored since the ultimate go-ahead comes from the Forest Service or the BLM.

The Grouse Creek mine in central Idaho, for example, won Forest Service approval even though the EPA warned that a strikingly beautiful high-elevation wetland valley would be destroyed.

"Let the fun begin!!!!!" Forest Service mining engineer Pete Peters wrote in jest to a supervisor as he tried to figure out how to manage millions of gallons of muddy runoff water at the mine.

Today, Peters acknowledges that he was unprepared for the enormity of his task of regulating the mine.

"There's no textbook. You have to hope you can stay ahead of it," he said. "It was like nothing I'd ever dealt with."

The mine, leaking cyanide, closed after three years without making a profit. Signs posted by a nearby creek for a time warned, "Caution -- do not drink this water."

Mining industry officials acknowledge that there have been environmental problems, even with modern mines. But they say that the industry generally does a good job of policing itself, and that state regulators also keep an eye on miners.

"The mining industry is not perfect, and mining has risks and it has impacts," said Laura Skaer, director of the Northwest Mining Association. "Over the years, the industry has developed the practices and the techniques, coupled with regulations, to mitigate those impacts. It doesn't mean there aren't going to be accidents; that there isn't going to be an occasional bad actor."

Accidents started to happen as soon as the Summitville mine opened in southwestern Colorado. Within six days, cyanide was leaking. The mine operator, Galactic Resources Ltd. of Canada, later went broke.

Galactic was one of a series of small mining companies, often financed through the loosely regulated Vancouver Stock Exchange, that rose to prominence during the mining boom before crashing in bankruptcy. Like other Canadian companies, it was allowed to mine on U.S. federal land even though Congress in 1872 specifically limited the privileges of the General Mining Law to "citizens of the United States and those who have declared their intention to become such."

The reason: In 1898, the U.S. Supreme Court ruled that corporations have the same legal rights as people. So today, a Toronto-headquartered firm such as Barrick Gold Corp. can set up a subsidiary in Nevada and privatize nearly 1,950 acres for less than $10,000. Last year, Barrick hauled away nearly 2.5 million ounces of gold worth more than $600 million on the open market.

"We have concluded, and the U.S. has concluded and many countries around the world have concluded that it is in their interest to provide an incentive to cause people to search for a mineral that otherwise isn't know to exist in that ground," said Pat Garver, Barrick's head lawyer.

Yet another Canadian firm, with offices in Spokane, Pegasus Gold, left three failing mines in Montana, including one that will cost taxpayers $33 million to clean up. Most Pegasus staff members kept working for the company as it reorganized, continuing to operate more profitable mines. Some even got bonuses.

Nothing for U.S. taxpayers

Not all critics of the 1872 law call for reform because of environmental damage. Some are galled by the fact that the law, breaking with tradition, allows miners to dig a fortune from public land without giving a share to the American citizens who own it.

Europe's royal families demanded a portion of all minerals taken from their New World colonies. And in the 18th century, Congress passed a law requiring a third of the profits from mines on federal lands go to the Treasury.

"Even the early miners in the West followed local mineral laws modified from German and British traditions which required a portion of the minerals to be returned to the community," said Carol Russell, mining specialist in the EPA's Denver office. "However, it appears that in the rush of the gold rush, royalties were forgotten, and haven't surfaced yet."

In 1920, Congress removed oil, natural gas and other minerals that could be used for fuel from the 1872 Mining Law. Instead, the government would lease the rights.

And in 1977, Congress decreed that miners of coal on federal land would have to pay a royalty of 8 to 12.5 percent, and clean up after themselves. The government in the past decade has collected $11.08 billion from companies taking coal, oil, and natural gas, plus $35.8 billion in rents, bonuses, royalties and escrow payments for offshore oil and gas reserves.

Still, hard-rock miners pay nothing for the gold, silver, platinum, copper and other minerals they get.

Walish, the manager of Cambior's Top of the World project, joins many in the mining industry in warning, "If massive royalties are put on federal land, you're going to see a lot less mining."

Critics are even more agitated about the mining companies' ability to transform public land into private land for no more than $5 an acre -- close to the fair market value for ranch and farmland in the West in 1872. Since 1964, more than 289,000 acres have been privatized, or patented, for mines.

Congress has temporarily prevented additional land from being privatized, but applications already in the pipeline are eligible to continue with the process. About 73,000 acres could eventually be privatized this way.

In 1872, Congress sold the land cheap because it wanted the West to be settled. That's why a typical claim of 20 acres cost $100 -- about three months' rent in a Seattle boardinghouse. Now, critics ask, why should the government continue to sell public land for a pittance when the frontier is closed, and the West largely settled?

'Why are they tearing it up?'

Years ago, a young man growing up in northern Arizona was surprised to see a big hole being scooped from the flanks of the picturesque San Francisco Peaks near his home. The mountains are considered sacred by the Hopi, the Navajo and 11 other tribes.

"They started ripping the side of this mountain open, and I remember asking early on: 'Who owns this land? And why are they tearing it up and carting it away?'" he recalled.

Decades later, "it's expanded into a gigantic scar on these sacred mountains. ... One of the most unspeakably beautiful places in the Southwest is being carted away, truckload by truckload."

The man is Bruce Babbitt, former Arizona governor and Interior secretary in the Clinton administration. For eight years, Babbitt administered the 1872 Mining Law. Babbitt hates the 1872 Mining Law.

What was being mined near Flagstaff was pumice, a light volcanic rock. Today most of it is used to give denim that soft, "stone-washed" look.

"It's not like it's being mined for some metal that's necessary," Babbitt said in an interview before leaving office. "It's being mined to make blue jeans look old. It's just a scandalous commentary on the Mining Law of 1872."

(The Los Angeles Times reported last week that Babbitt is helping The Hearst Corp., owner of the Seattle Post-Intelligencer, broker a deal worth $200 million or more that will determine the fate of Hearst's seaside ranch at San Simeon in central California.)

Babbitt never forgot the San Francisco Peaks, and last year the government agreed that federal taxpayers would give the mine's operators $1 million to stop digging. He also worked hard to overhaul the law that allowed them to do it in the first place, calling it "a license to steal."

His case was bolstered by the General Accounting Office, the investigative arm of Congress, which issued numerous reports critical of the 1872 law, saying it "runs counter to other national resource policies" while allowing valuable land to be sold at nominal amounts.

Facing stiff opposition from a Republican-controlled Congress, Democrat Babbitt switched gears in early 1997, pushing for more modest reforms through a rewrite of his agency's own rules for administering the law.

Opponents in Congress moved to block even that reform. They ordered Babbitt to stall the rewrite of the rules until a panel appointed by the National Academy of Sciences could study the issue and report back.

The NAS panel concluded that mine regulations "are generally well coordinated, although some changes are necessary." It listed seven "regulatory gaps," including "financial risks to the public and environmental risks to the land" because companies sometimes post inadequate bonds to pay for reclamation after mining ends.

Likewise, the EPA's inspector general concluded that "critical gaps" in bonding programs "could result in environmental problems and sizable cleanup costs for the federal taxpayers."

These criticisms stemmed from a system that allowed local Forest Service and BLM officials to negotiate a financial guarantee with a mining company to cover cleanup costs. Those "guarantees" can prove uncollectible after a bankruptcy.

Cleanup bonds posted by some miners were often inadequate to cover the true cost of fixing the environmental damage associated with huge modern mines. They also assumed the company would save money by doing much of the work itself, while bankrupt firms often simply abandon mines.

Babbitt went further than the NAS panel suggested, though. The new regulations set minimum environmental standards for mines and, for the first time, gave federal land managers authority to deny a mining permit if it would cause "substantial irreparable harm ... that cannot be effectively mitigated."

As for reclamation bonds, the new rules assume a worst-case scenario: The company goes bankrupt, and the government has to take over. Some forms of bonds that have proven difficult to collect were forbidden.

The rules were published in the Federal Register in November, and went into effect at 12:01 a.m. on Jan. 20 -- just hours before George W. Bush was sworn in as president.

The mining industry has characterized the rules as "burdensome, complex, counterproductive ... onerous and misguided regulations rushed through during the waning days of the Clinton administration."

Jack Gerard of the National Mining Association said that "the Clinton administration took a sledgehammer to deal with a mosquito."

Among those to challenge the rules in court were his association and the state of Nevada, home of most of America's gold mines.

Environmentalists, too, have been critical of the new regulations.

Alan Septoff, legislative director of the Mineral Policy Center, said miners are still allowed to harm the environment, so long as they "effectively mitigate" the damage elsewhere.

"Even though the stronger mining rule is monumentally better than the old rule, that's a testament to the inadequacy of the old rule," Septoff said.

In March, Babbitt's successor as U.S. Interior secretary, Gale Norton, ordered a reconsideration of the rules. Next month, the BLM is expected to issue a watered-down version of Babbitt's rules or revert to old regulations adopted in the Carter administration.

At the EPA, this prospect causes concern -- particularly if rules on cleanup bonds are to be weakened.

"The vast majority of these (mining Superfund) sites were historic sites, but in recent years we're finding sites that are inadequately bonded, and the government is getting saddled with the cleanup costs," said Nick Ceto, mining coordinator at the EPA's Seattle office.